‘Best of’ lists: room to be better

Companies are always happy to be included in “best of” media lists for energy and cleantech. And many of them, in my opinion, are deservedly included. But I’m just one opinion. The media supposedly represents a more informed opinion. So I was curious how these lists are compiled.  Is the selection process scientific? Do the lists reflect common wisdom or is it totally random? Is there a herd mentality? Or maybe it’s based on relationships? I decided to see if there is any rhyme or reason to the various selection methodologies and the results. After all, there are hundreds of innovative cleantech companies out there doing thousands of amazing things. Fast Company, the Wall Street Journal, Greentech Media, Businessweek/Bloomberg and other media groups have all come forth with lists. I should say up front that I am friends with many of the people who compiled these lists, and I’m even a sometimes contributor to Greentech Media. You might think that as the head of the cleantech practice at a large communications firm that I would want to shy away from razzing them. But then you wouldn’t know me very well. So first things first: here’s a list of selection criteria for several of the lists, starting with the funniest and ending with the driest.

  • Greentech Media: Methodology:  We spread the names of 500 VC-funded firms on the Greentech Media dance floor and cut the head off of a chicken. Wherever the chicken landed – that was a winner. We stopped when we ran out of chickens.
  • Bloomberg / Businessweek: Our criteria: These picks are starting to gain traction with real, innovative products and services for sale, they are not yet publicly listed, they are not yet household names, and all have bona fide venture capital backing and other high-profile investors.
  • Fast Company: Apparently there isn’t a methodology (at least not one that I could find). But some of the language in the issue gives a vague hint at what’s important: “surprising and extraordinary efforts” and “each company… illustrates the power and potential of innovative ideas and creative execution”.
  • Wall Street Journal: A team from research firm Dow Jones VentureSource (owned by Dow Jones & Company, publisher of the Journal) calculated the rankings, applying a set of financial criteria to some 350 U.S.-based venture-backed businesses in clean technology valued at less than $1 billion. Companies that make everything from fuel cell technologies to carbon-management software were analyzed according to four financial criteria: the track records of success for both a company’s founders and management; track records for the investors on its board; the amount of capital raised in the last three years; and the percentage change in a company’s valuation in the 12 months ended Nov. 30. Dow Jones reporters and editors who cover the venture capital industry also provided their perspective and expertise beyond the numbers.

A few conclusions:

  • There is a wide divergence in opinion. When you cross-reference the four lists, only Silver Spring Networks appears on all lists. Only two companies appear on three of the lists: eMeter (a client of my company Weber Shandwick) and Solyndra. A corollary is that definitions of cleantech vary (and are not clearly defined by the media in question). For example companies like Recycle Bank (which were named) are great companies, but are they strictly tech products or services?
  • There appears to be a common assumption that success in raising money from VCs and the “caliber” of those VCs equates to successful business. Tell that to the nine out of 10 VC-backed companies that fail.
  • There is an element of the subjective to all lists (aka “expertise beyond the numbers”), which means that personal relationships with the “deciders” matter.
  • “Innovation” appears to be a common factor in selection as well, but none of the media define what the term means, further contributing to the subjectivity of it all.
  • The Wall Street Journal has the most rigorous process. What’s interesting though is that many of the people I know in cleantech (investors, entrepreneurs, etc) scratch their head at some of companies chosen by WSJ.

Final thought: in a world where consumers of media are also increasingly content producers, why aren’t media tapping into the collective wisdom of the cleantech/energy crowd to help identify the true leaders, as well as vote on them? Recognition by peers is much more valuable to a business than recognition by media.